7th Circuit removes East Chicago lead pollution case to federal court

Companies sued by residents who claim their former housing complex in East Chicago was polluted by toxins including lead and arsenic prevailed in their bid to have the case heard in federal rather than state court. In doing so, the 7th Circuit Court of Appeals also eased the standard for when a defendant may assert a defense of acting under federal authority.

The 7th Circuit Court of Appeals on Thursday reversed a ruling that kept the case, Sherrie Baker, et al. v. Atlantic Richfield Company, et al., 19-3159 & 19-3160, in state court. Residents of the former West Calumet public housing complex claim their health was harmed by pollution on property that once was the site of a lead smelter — a toxic legacy the former residents claim was withheld from them by state and federal agencies who knew of dangerously elevated levels of toxins.

Thursday’s ruling addressed where one of these suits will proceed. The 7th Circuit held that because defendants Atlantic Richfield and DuPont argued predecessor companies were contracted by the federal government in the 1940s to produce Freon-12 and hydrochloric acid on the site — whose waste streams included lead and arsenic — the Northern Indiana District Court had erred by moving the case to state court. The district court held state court was the proper venue because the federal contract made up a small portion of the time in which polluting processes took place on the site.

In moving the case back to federal court, the 7th Circuit noted that before 2011, removing defendants had to demonstrate that the acts for which they were being sued occurred at least in part because of what they were asked to do by the government. In 2011, however, the statute was amended to encompass suits for or relating to any act under color of federal office.

“Since then, three of our fellow circuits have concluded that, in the Removal Clarification Act, ‘Congress broadened federal officer removal to actions, not just causally connected, but alternatively connected or associated, with acts under color of federal office,’” Judge Joel Flaum wrote, citing Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286, 292 (5th Cir. 2020) (en banc) and Sawyer v. Foster Wheeler LLC, 860 F.3d 249, 258 (4th Cir. 2017), among other cases.

“Up until today, by contrast, we and the Eleventh Circuit have stopped short of abandoning the ‘causal connection’ test, though we both had ‘essentially implemented a connection rationale for removal.’ … We see no need to do so any longer, however, and now join all the courts of appeals that have replaced causation with connection and expressly adopt that standard as our own. … This position better comports with the Supreme Court’s decisions, which have never utilized a rigid causation standard for removal.”

Also, the court found that because the federal government had contracted for wartime production with predecessor company International Smelting and Refining Co., the defendants in this case may be entitled to a government contractor defense that requires federal jurisdiction.

“… (A)t least some of ISR’s production went directly to the United States military to support its efforts in World War II, and nearly all its production served as inputs to produce a wide variety of critical wartime supplies. The federal government dictated to whom and in what amounts ISR could sell its products, outside of the quota it reserved for itself, and it also set precise specifications for those final products. … (T)he government here all but nationalized ISR’s production during World War II.

“Atlantic Richfield has a colorable federal defense,” the panel held, so the case was remanded for proceedings in the U.S. District Court for the Northern District of Indiana.

“‘At this point,’ it is worth remembering that ‘we are concerned with who makes the ultimate determination, not what that determination will be,’” the panel concluded, citing Ruppel v. CBS Corp., 701 F.3d at 1182 (7th Cir. 2012). “… Both the Residents and the Companies have reasonable theories of this case. Our role at this stage of the litigation is to credit only the Companies’ theory. … After reviewing their allegations and the applicable law, we conclude the Companies have made an adequate threshold showing to remove their case to federal court.”

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